That I do not understand. Why are people so desperate for funding, any funding?
An ex-Zynga engineer should be easily able to save enough money for at least 6 months, while he's working on an mvp.
Pre-emptive note: I do understand the value of idea validation, expert advice and connections that comes from getting a small investment from YC or a well-connected angel investor like Kevin Rose.
But "friends and family"? It seems bad for both parties.
If successful, the founders will loose a significant portion of the business for insignificant help (small amount of money but no expert advice and no network to help them in the future).
But most likely they'll fail which doesn't seem fair to their friends and family.
Incubators like YC and angel investors are sophisticated. They only invest money they can afford to loose, they understand that any single investment has 10% chance of succeeding so they hedge their bets and they also have a much better understanding of what has a potential to be successful enough to offer enough ROI for the investor.
Compared to that, an average person is naive and over-confident about investing, just like the author of the article was ("I quickly learned that unless your product has mass appeal and traction, or you are Kevin Rose, high profile Angels are not going to throw money at you.").
Both parties are victims of confirmation bias: reading TechCrunch one reads mostly about successful investments and exits which makes inspiring entrepreneurs think that an investment is normal and inevitable (reality: it's extremely rare and only awarded to those who stand out from the crowd) and makes naive "friends and family" investors think that making 10x ROI is a sure ticket to riches (reality: only the top investors make significant returns).